BKW GROUP. Half-Year Report 2017

Transcription

1 BKW GROUP Half-Year Report 2017

2 FACTS & FIGURES BKW Group Financials (restated) (restated) 2017 Total operating revenue 2, , ,297.7 Operating profit Net profit Cash flow from operating activities Investments in property, plant and equipment and intangible assets Acquisition of Group companies and associates Balance sheet total 8, , ,696.0 Shareholders equity 2, , ,123.1 as % of balance sheet total Electricity business GWh 2017 Sales Sales Switzerland 7,147 3,575 3,956 Sales International 2,348 1,174 1,161 Market sales 11,370 5,393 5,662 Pump/substitution energy Transmission losses/own consumption Total 21,449 10,447 11,089 Generation and purchases (incl. financial interests) Hydroelectric plants 3,614 1,563 1,543 Nuclear power plants incl. purchase contracts 5,261 3,148 2,769 Fossil-fuel power plants 1, ,207 New renewable energy Trade (purchases) and energy buy-backs 10,231 4,593 4,991 Total 21,449 10,447 11,089 Employees Full-time equivalent Employees 5,007 4,830 5,768

3 Table of contents 4 Foreword 4 Higher revenues and operating profit 5 Financial Result 5 Higher total operating revenue and increased operating profit 11 Half-Year Financial Statements of the BKW Group 12 Consolidated Income Statement 13 Consolidated Statement of Comprehensive Income 14 Consolidated Balance Sheet 15 Changes in Consolidated Equity 16 Consolidated Cash Flow Statement 17 Notes to the Financial Statements 31 Investor Information

4 4 HALF-YEAR REPORT 2017 FOREWORD Higher revenues and operating profit In the first half of 2017, the BKW Group 1 again achieved an excellent financial result and successfully offset the persistent negative effects of falling electricity prices. At CHF 1.3 billion, total operating revenue was 9 % higher than the previous year s adjusted figure, while operating profit increased by CHF 11 million to CHF 182 million. We are successfully optimising our energy position through trading With traditional management of our energy position, expansion of the trading services and highly successful electricity trading, we were able to offset the negative effects of electricity prices to a large extent. We are continuously expanding the trading services in particular the direct marketing of renewable wind energy. We already manage a wind portfolio with an output of more than 5 gigawatts, directly integrated into the electricity market for our partners. Dear Shareholder, Dear Sir/Madam, BKW continues to achieve pioneering feats in various regions. The global energy sector is currently in the midst of an enormous transformation. This calls for more than just a good strategy. We need courage, endurance, entrepreneurial thinking and focused work to continue being successful. We are stable yet agile We are focusing on three overriding objectives: strengthening the Energy segment, developing our Grid business and, at the same time, expanding our Services. We are systematically pursuing a strategy that provides us with stability and gives us the agility we need irrespective of future electricity prices. For example, we are transforming our company into a provider of energy and infrastructure services. We are maintaining our strong regional roots and becoming more connected We continue to experience strong growth in the Services segment and are gradually becoming a unique network of companies, one that already employs more than 6,000 people. We strive to preserve the regional ties of the companies that join BKW and to ensure that they all work together to the benefit of the Group. At the same time, we are accessing new markets, making the most of available expertise and seeking inspiration from innovative technologies. We are systematically managing our costs With systematic and continuous cost management, we again managed to increase efficiency and thereby make a considerable contribution towards the strong operating result. We are stepping up the production of renewable energy With the Marker wind farm project in Norway and the ongoing projects in France, we are stepping up our commitment to wind energy production and using the excellent local wind conditions to produce renewable energy. In Switzerland, we are continuing to increase the supply of hydroelectric power with two additional small hydroelectric plants in the Bernese Oberland. We are developing solutions for a worthwhile future BKW is committed to finding future-proof, economically viable solutions. We make a contribution to important social issues in the areas of energy and modern infrastructures. We have a future-oriented mindset, operate responsibly and see challenges as opportunities. As a service provider, we see things through our customers eyes, which allows us to create solutions for a worthwhile future. Good result expected for 2017 We confirm our previously communicated financial outlook for the current financial year and are expecting an operating profit (excluding exceptional items) in line with the previous year s figure. Kind regards, 1 The BKW Group comprises BKW AG and its Group companies. In order to make this report easier to read, the Group is referred to as BKW. Where the text relates specifically to BKW AG or BKW Energie AG, this is expressly mentioned. Suzanne Thoma, CEO

5 HALF-YEAR REPORT FINANCIAL RESULT Higher total operating revenue and increased operating profit BKW can once again point to an excellent financial result. Despite the continued negative development of electricity prices, BKW was able to increase total operating revenue by 9 % to CHF 1.3 billion. This growth is mainly attributable to the ongoing expansion of the Services business. Operating profit (EBIT) was also up by 6 % to CHF 182 million, which enabled the negative effects of fluctuating electricity prices to be offset once again. All three segments Energy, Grid and Services contributed to this positive development. Strong operating profit negative effects of electricity prices offset successfully BKW finished the first half of 2017 with operating profit amounting to an excellent CHF million, up by 6 % (CHF 10.9 million) on the previous year s adjusted figure. The persistent negative effects of fluctuating electricity prices were therefore more than offset in the first half of the year. Optimum management of the energy position, a good trading result, a greater earnings contribution from the Services business, and continuous and consistent cost management were the main factors in offsetting the negative price effects and increasing the operating profit. At CHF million, net profit was 7 % (or CHF 8.2 million) below the previous year s figure, due solely to the one-off gain from the sale of the participating interest in Romande Energie in. Without this one-off effect, net profit would have been up slightly. The results for operating activities therefore improved at all levels. Operating cash flow stood at CHF million, up on the previous year s figure, which means that active investment can be financed entirely from funds generated internally on an ongoing basis. BKW s liquidity therefore remains high, amounting to CHF 1.2 billion as at 30 June (restated) 2017 % change Total operating revenue 1, , % Energy procurement/transport % Operating costs % Material and third-party services % Personnel expenses % other operating expenses % Operating profit before depreciation, amortisation and impairment % Depreciation, amortisation and impairment % Income from associates Operating profit/loss % Financial result % Profit/loss before income taxes % Income taxes % Net profit from continuing operations % Net profit/loss from discontinued operations Net profit %

6 6 HALF-YEAR REPORT 2017 Financial Result Greater revenues due to sustained active acquisitions in all areas Total operating revenue increased to CHF 1,297.7 million, up by a total of 9 % on the previous year (adjusted), despite price-related sales declines in the Energy segment. Both the Services business (+ 37 % to CHF million) and the Grid business (+ 16 % to CHF million) enjoyed doubledigit growth as a result of acquisitions. As anticipated, total operating revenue from the Energy business was down due to lower electricity prices ( 4 % to CHF million), despite the acquisition of AEK Energie AG (AEK) in the previous year and further expansion in the areas of wind and small hydro energy. The reporting of the total operating revenue was adjusted due to the ongoing assessment of the distribution business in Italy. BKW is currently assessing various options, with the main focus on selling the sales activities. The distribution business in Italy is therefore classified as a discontinued operation in accordance with the guidelines of IFRS 5. The income and expenses associated with these discontinued operations have been eliminated and summarised on one line. The previous year s figures have been adjusted accordingly. Further reduction of operating expenses in established business areas In the established business areas, operating expenses were again reduced in the region of doubledigit millions thanks to continuous and consistent cost management. However, as a whole, the reported operating expenses increased by CHF 73.4 million (16 %) in comparison to the previous year. This rise is attributable solely to the considerable expansion of the Services business with its high personnel requirements. Due to the acquisitions, 750 new employees joined BKW in the first half of Stable financial result despite absence of one-off positive effect At CHF 20.7 million, the financial result was only slightly lower than the previous year s result, which was positively influenced by the one-off gain from the sale of the participating interest in Romande Energie (CHF 11 million). The decommissioning and disposal funds performed better than in the first half of, meaning that the eventual difference over the previous year was just CHF 2.5 million. At CHF million, net profit was 7 % (or CHF 8.2 million) down on the previous year s figure. Adjusted for last year s one-off effect in the financial result, the comparative net profit was about 2 % higher.

7 HALF-YEAR REPORT 2017 Financial Result 7 Energy: negative effects of electricity prices offset successfully The Energy business builds, operates and maintains BKW s pool of power plants in Switzerland and abroad. It also includes the sale of energy and trading in electricity, certificates and raw materials. The revenues and expenses for energy deliveries relating to the distribution business in Italy were eliminated, as there are plans to sell it. The previous year was adjusted in the interest of comparability. (restated) 2017 % change Electricity sales Switzerland % Other electricity sales % Income from other energy business % Other operating income and own work capitalised % Total operating revenue % Energy procurement % Expense from other energy business % Operating costs % Personnel expenses % Material and third-party services and other operating expenses % Total operating expenses % Operating profit before depreciation, amortisation and impairment % Depreciation, amortisation and impairment % Income from associates Operating profit/loss % As anticipated, the lower electricity prices affected sales in the Energy business. Despite the very successful management of the energy position, excellent electricity trading, a further increase in new wind and small hydro plants, and the acquisition of AEK, the negative development of electricity prices still had an impact. As a result, total operating revenue increased only slightly by 4 % to CHF million. In the partially regulated Swiss distribution business, higher volumes (+ 0.4 TWh) due to acquisitions resulted in a small increase in revenue (3 %) to CHF million. However, other electricity sales (including market sales, direct sales from power plants and trading activities) were down by CHF 40.5 million as a result of price factors. Energy procurement costs increased by 6 % to CHF million. However, the previous year s figure includes a partial release of the provision for onerous energy procurement contracts for the gas power plant in Livorno Ferraris in the amount of CHF 28 million. Taking into account this special item, energy procurement costs decreased by CHF 5.2 million in comparison. This was due mainly to lower market procurement costs as a result of price factors. In contrast, production costs from power plants in which BKW owns a minority stake have increased. The volume produced by nuclear power plants was considerably lower, due in particular to the extended outage of the Leibstadt plant. This led to procurement of higher volumes from the market. Fossil-fuel power plants, on the other hand, generated higher volumes, which meant that the variable procurement costs also increased. At 6.1 TWh, total electricity production was 0.2 TWh higher than in the previous year.

8 8 HALF-YEAR REPORT 2017 Financial Result Thanks to improvements in efficiency and continuous cost savings, it was again possible to cut operating expenses, which were down by 9 % (CHF 13.4 million). At CHF 81.1 million, the reported operating profit was slightly higher than in the previous year (+ 1 %). Given the known negative impact of electricity prices, this was an excellent result. Thanks to optimum management of the energy position and systematic cost management, these negative price effects were again offset successfully. Grid: contribution to overall result increased again The Grid segment builds, operates and maintains BKW s distribution grid. It also includes the transport of energy for end consumers outside BKW s supply region. The revenues and expenses for energy deliveries relating to the distribution business in Italy were eliminated, as there are plans to sell it. The previous year was adjusted in the interest of comparability. (restated) 2017 % change Distribution grid usage fees % Other operating income and own work capitalised % Total operating revenue % Energy transport expense % Operating costs % Personnel expenses % Material and third-party services and other operating expenses % Total operating expenses % Operating profit before depreciation, amortisation and impairment % Depreciation, amortisation and impairment % Income from associates % Operating profit/loss % Total operating revenue of the Grid business improved by 16 % to CHF million. Distribution grid usage fee revenue increased by 12 % to CHF million. This increase is due in particular to the acquisition of AEK in the previous year. Other operating revenue also includes cost reimbursements relating to the transfer of the transmission system in Energy transport costs increased by 20 % due to higher volumes of distributed power. The reported operating expenses increased by 1 % due to the extra business from AEK. On the other hand, costs in the established business areas were cut considerably ( 6 %). The result from associates was CHF 6.9 million lower, as AEK was still included in this item last year. At CHF million in total, the operating profit of the Grid business is 15 % higher than in the previous year. This means the grids have yet again made an essential contribution to the overall result of BKW.

9 HALF-YEAR REPORT 2017 Financial Result 9 Services: rapid expansion leads to higher operating profit The Services business includes engineering planning and consulting for energy, infrastructure and environmental projects, integrated services in the area of building technology, and the construction, servicing and maintenance of network infrastructures (energy, water, telecommunication) % change Income from services % Other operating income % Total operating revenue % Operating costs % Personnel expenses % Material and third-party services and other operating expenses % Total operating expenses % Operating profit before depreciation, amortisation and impairment % Depreciation, amortisation and impairment % Income from associates % Operating profit/loss % The Services business again recorded a considerable rise in total operating revenue. Revenues grew by CHF 89.2 million (37 %) to CHF million, which meant that the strategic expansion of the Services business continued apace. In the first half of 2017, a total of ten companies were acquired in the building technology (in particular heating installation), grid/infrastructure services, and engineering sectors. As well as expanding the engineering business through acquisitions in Germany (in particular the Assmann Group) and in Switzerland (the Grunder Group), BKW also enhanced its geographical presence in the building technology sector as a national service provider and is now represented in western Switzerland as well. In addition, it further expanded its network infrastructure services considerably with the acquisition of Hinni AG. Operating expenses in the Services business, with its higher personnel requirements, have risen in parallel to the strong growth in sales. One-off company acquisition and integration costs resulting from business purchases continue to be a burden on the expense items. In addition, since the Services business typically experiences significant sector-specific seasonal effects (particularly for grid services and building technologies), a strong second half of the year is expected in this area. At CHF 15.0 million, the reported EBIT of the Services business in the first half of the year was still considerably higher than the previous year s figure and disproportionately higher than sales. Despite persistently high acquisition-related costs, the margin is still on target.

10 10 HALF-YEAR REPORT 2017 Financial Result Large cash inflow from operating activities Operating cash flow from the first half of the year amounted to CHF million (previous year: CHF 60.9 million). The considerable increase in comparison to the previous year is due primarily to the improved net working capital. Funds from operations (cash inflow from the change in net working capital) amounted to CHF million (previous year: CHF million), its highest level for five years. The investing activities in the first half of 2017 can therefore be financed almost entirely from funds generated internally within this period. Investments in expansion of the Services business, in new power plants, and in the grid infrastructure amounted to CHF million in the first half of Growth investments make up almost two thirds of this figure. Equity and financing situation: financial and operational flexibility The balance sheet total rose by 1.3 % compared with the end of the year, coming in at CHF 8.7 billion at the half-year mark. Despite the higher balance sheet total, the equity ratio increased to 35.9 % (end of : 34.3 %). Due to the half-year profit and the sale of treasury shares for conversion of the convertible bond, equity increased to CHF 3.1 billion Current assets 2, ,331.7 Non-current assets 6, ,364.3 Current liabilities 1, ,112.8 Non-current liabilities 4, ,460.1 Shareholders equity 2, ,123.1 Balance sheet total 8, ,696.0 BKW s financing situation remains solid. Net debts (financial liabilities less current financial assets and cash and cash equivalents) were down by CHF 18 million to CHF million at the half-year point, due in particular to the conversion of outstanding convertible bonds. The first refinancing of outstanding bonds amounting to CHF 150 million is due in In addition, BKW maintains an unused syndicated loan of CHF 250 million. The financial framework needed for maintaining financial and operational flexibility is therefore sufficient and secured on an ongoing basis.

11 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group

12 12 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group Consolidated Income Statement (restated) Net sales 1, ,222.0 Own work capitalised Other operating income Total operating revenue 1, ,297.7 Energy procurement/transport Material and third-party services Personnel expenses Other operating expenses Total operating expenses ,041.8 Operating profit before depreciation, amortisation and impairment Depreciation, amortisation and impairment Income from associates Operating profit/loss Financial income Financial expenses Profit/loss before income taxes Income taxes Net profit from continuing operations Net profit/loss from discontinued operations Net profit attributable to: BKW shareholders Non-controlling interests Earnings per share in CHF (undiluted) Earnings per share in CHF (diluted) Result per share in CHF from continuing operations (undiluted) Result per share in CHF from continuing operations (diluted)

13 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 13 Consolidated Statement of Comprehensive Income Net profit Actuarial gains/losses (Group companies) Actuarial gains/losses(-) Income taxes Actuarial gains/losses (associates) Actuarial gains/losses(-) Income taxes Total items that will not be reclassified to income statement, net of tax Currency translations Currency translations Available-for-sale financial assets Value adjustments Reclassification to the income statement Income taxes Hedging transactions Value adjustments Income taxes Total items that may be reclassified to income statement, net of tax Other comprehensive income Comprehensive income attributable to: BKW shareholders Non-controlling interests

14 14 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group Consolidated Balance Sheet Assets Cash and cash equivalents Trade accounts receivable and other receivables Current tax receivables Financial assets Derivatives Inventories Prepaid expenses and accrued income Total current assets 2, ,331.7 Financial assets 1, ,255.8 Derivatives Investments in associates 1, ,372.9 Property, plant and equipment 3, ,106.9 Intangible assets Deferred tax receivables Total non-current assets 6, ,364.3 Total assets 8, ,696.0 Shareholders equity and liabilities Trade accounts payable and other liabilities Current tax liabilities Financial liabilities Derivatives Provisions Deferred income and accrued expenses Total current liabilities 1, ,112.8 Financial liabilities 1, ,526.8 Derivatives Pension liability Other liabilities Provisions 1, ,847.5 Deferred tax liabilities Total non-current liabilities 4, ,460.1 Total liabilities 5, ,572.9 Share capital Capital reserves Retained earnings 3, ,064.7 Other reserves Treasury shares Equity attributable to BKW shareholders 2, ,868.2 Equity attributable to non-controlling interests Total shareholders equity 2, ,123.1 Total shareholders equity and liabilities 8, ,696.0

15 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 15 Changes in Consolidated Equity Share capital Capital reserves Retained earnings Treasury shares Other reserves Attributable to BKW shareholders Attributable to non-controlling interests Equity at , , ,576.0 Net profit Other comprehensive income Comprehensive income Dividend Transactions in treasury shares Share-based payments Acquisition of non-controlling interests Changes in the scope of consolidation Change in liabilities relating to non-controlling interests Equity at , , ,519.9 Total Equity at , , ,940.9 Net profit Other comprehensive income Comprehensive income Dividend Transactions in treasury shares Share-based payments Acquisition of non-controlling interests Changes in the scope of consolidation Change in liabilities relating to non-controlling interests Equity at , , ,123.1

16 16 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group Consolidated Cash Flow Statement Profit/loss before income taxes from continuing operations Profit/loss before income taxes from discontinued operations Adjustment for: Depreciation, amortisation and impairment Income from associates Financial result Gains/losses from sale of non-current assets Change in non-current provisions (excl. interest) Change in assigned rights of use Change from the valuation of energy derivatives Other non-cash positions Change in net working capital (excl. financial assets/liabilities and derivatives) Income taxes paid Other financial items paid Cash flow from operating activities Investments in property, plant and equipment Disposal of property, plant and equipment Acquisition of Group companies Investments in associates Investments in current and non-current financial assets Disposals of current and non-current financial assets Investments in intangible assets Disposals of intangible assets Interest received Dividends received Cash flow from investing activities Sale/purchase of treasury shares Acquisition of non-controlling interests Increase in current and non-current financial liabilities Decrease in current and non-current financial liabilities Increase in other long-term liabilities Decrease in other long-term liabilities Interest paid Dividends paid Cash flow from financing activities Translation adjustments on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at start of reporting period Cash and cash equivalents at end of reporting period

17 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 17 Notes to the Interim Financial Statements 1 Business activities BKW AG, Bern (CH), together with its Group companies, is an international energy and infrastructure business. Its company network and extensive expertise allow it to offer its customers a full range of overall solutions. The Group plans, builds and operates infrastructure to produce and supply energy to businesses, households and the public sector, and offers digital business models for renewable energies. The BKW Group portfolio comprises everything from engineering consultancy and planning for energy, infrastructure and environmental projects, to integrated offers in the field of building technology and the construction, servicing and maintenance of energy, telecommunications, transport and water networks 2 Basis of preparation 2.1 General principles The unaudited consolidated financial statements for the half-year ended 30 June 2017 have been prepared in accordance with the International Accounting Standard on Interim Financial Reporting (IAS 34) and should be read in conjunction with the consolidated financial statements to 31 December. These interim financial statements have been drawn up in accordance with the principles described in the Financial Report (pages 19 to 32). The consolidated interim financial statements for the period ended 30 June 2017 were approved by the BKW AG Board of Directors on 31 August 2017 and released for publication. The preparation of this Half-Year Report entailed assumptions and estimates. Actual results may differ from these estimates. 2.2 Adoption of new standards and interpretations In the financial year 2017, BKW was required to adopt the following new or revised standards: Amendments to IAS 7 Disclosure Initiative Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses Annual Improvements to 2014 Cycle These changes have had no effect on the presentation of the financial position, results of operations and cash flows of BKW. The application of the IAS 7 amendments did not have any effect on the preparation of this Half-Year Report.

18 18 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 2.3 Future adoption of new standards and interpretations The following new and amended standards and interpretations had been published by the balance sheet date, but will not be applied until subsequent financial years. BKW intends to apply the changes from the date on which they enter into force (entry into force for financial years beginning on or after the dates in brackets): IFRS 9 Financial Instruments (1 January 2018) IFRS 15 Revenue from Contracts with Customers (1 January 2018) IFRS 16 Leases (1 January 2019) IFRIC 22 Foreign Currency Transactions and Advance Consideration (1 January 2018) IFRIC 23 Uncertainty over Income Tax Treatments (1 January 2019) Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (to be determined) Amendments to IFRS 15 Clarifications (1 January 2018) Changes to IFRS 2 Classification and Measurement of Share-based Payment Transactions (1 January 2018) BKW is currently examining the possible effects of applying these new or changed standards and interpretations. 2.4 Discontinued operations BKW is currently assessing various options for the Italian distribution business, with the main focus on selling the sales activities, including the corresponding sales contracts and customer base. These services are performed by the group company Electra Italia S.p.A., which is classified as a discontinued operation pursuant to the guidelines of IFRS 5 Non-current assets or disposal groups held for sale. In the income statement, the revenues and expenses from these discontinued operations are summarised on one line. The previous year s figures have been adjusted accordingly. 2.5 Foreign currency exchange rates The reporting currency is the Swiss franc (CHF). The currency exchange rates in relation to the Swiss franc applied to the consolidated financial statements were as follows: Closing date Closing date Average Average 2017 EUR/CHF

19 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 19 3 Business combinations Business combinations 2017 Assmann Beraten + Planen Miscellaneous Total Cash and cash equivalents Trade accounts receivable Other current assets Financial assets Property, plant and equipment Intangible assets Current liabilities Non-current financial liabilities Pension liability Non-current provisions Deferred tax liabilities Fair value of acquired net assets Non-controlling interests Fair value of interests already held Goodwill Purchase price Deferred and contingent purchase price payments Cash and cash equivalents acquired Cash outflow The values for the transactions listed are provisional since the purchase price allocations have not been finalised. Assmann Beraten + Planen On 1 March 2017, BKW acquired a majority stake of 95.6 % in Assmann Beraten + Planen AG (Assmann). The Berlin-based engineering company is one of the largest general contractor and project management firms in Germany. The company has been assigned to the Services segment. At the acquisition date, there were contingent purchase price payments of CHF 4.9 million. These purchase price payments depend on business performance in the coming years. The goodwill recognised is attributable mainly to the expected synergies and the acquisition of a qualified workforce. There are no considerable value adjustments in the trade accounts receivable. The transaction costs amounted to CHF 0.3 million. Had the company been acquired at the start of the reporting year, total operating revenue for the first half of 2017 would have been CHF 7.0 million higher and net profit CHF 3.8 million lower. Between the point at which the company was fully consolidated and 30 June 2017, the acquired company recorded a total operating revenue of CHF 19.3 million and a net profit of CHF 1.6 million.

20 20 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group Miscellaneous In the first half of 2017, BKW conducted a number of other corporate acquisitions, for which summarised figures are reported due to the individual size of each operation. BKW acquired 100 % of the shares in AEP Planung + Beratung GmbH (Austria), the QSB Group (Germany) and the Grunder Group, all of which specialise in infrastructure engineering. The company also acquired 100 % of the shares in Hinni AG, which operates mainly in the drinking water and extinguishing water segments. In addition, BKW acquired a further 30 % of Hertli & Bertschy AG and is now the majority shareholder of the company with a stake of 70 %. BKW also acquired 100 % of the shares in Winkelmann Elektro AG. Both companies specialise in electrical installations. In addition, BKW acquired 100 % of the shares in Raboud Energie SA, which operates in the building technologies industry. In Germany, a majority stake of 85 % was acquired in Giesen-Gillhoff-Loomans GbR. This planning bureau is active in the area of technical building equipment. A majority stake of 80 % was acquired in the Düsseldorf-based company Propertunities Immobilien Consulting GmbH, which offers project management services in particular. All the businesses acquired are assigned to the Services segment. At the acquisition date, contingent purchase price payments amounted to CHF 11.2 million in relation to the acquisition of these companies. The final amount due will depend on the future business performance of the companies. The transactions included goodwill of CHF 46.3 million. The goodwill recognised is attributable primarily to the expected future synergies and the acquisition of a qualified workforce. There are no considerable value adjustments in the trade accounts receivable. The transaction costs amounted to CHF 0.2 million. Had the companies already been acquired as at 1 January 2017, total operating revenue for the first half of 2017 would have been CHF 11.6 million higher and net profit unchanged. Between the point at which the individual companies were fully consolidated and 30 June 2017, the acquired companies recorded cumulative total operating revenue of CHF 25.9 million and a total net profit of CHF 1.5 million.

21 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 21 Business combinations AEK Lindschulte Inag- Nievergelt Miscellaneous Total Cash and cash equivalents Trade accounts receivable Other current assets Financial assets Property, plant and equipment Intangible assets Deferred tax assets Current liabilities Non-current financial liabilities Non-current provisions Deferred tax liabilities Other non-current liabilities Fair value of acquired net assets Non-controlling interests Fair value of interests already held Goodwill Purchase price Deferred and contingent purchase price payments Cash and cash equivalents acquired Cash outflow All the transactions for the previous year are shown as definitive figures, as purchase price allocations have now been finalised. These final purchase price allocations resulted in some minor differences when set against figures from the Half-Year Report. AEK Energie AG (AEK) On 28 June, BKW acquired 53.7 % of AEK Energie AG (AEK), thus increasing its stake from 39.5 % to 93.2 %. AEK operates in various fields and therefore affects all three segments Energy, Grid and Services. The goodwill recognised is attributable to the expected future synergies and the acquisition of a qualified workforce: CHF 11.0 million is allocated to the Energy segment and CHF 10.2 million to the Services segment. The transaction costs amounted to CHF 0.3 million. Had the company already been acquired as at 1 January, total operating revenue for the first half of would have been CHF 66.5 million higher and net profit CHF 4.8 million higher.

22 22 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group Lindschulte Group On 22 April, BKW acquired 100 % of the shares in Lindschulte Ingenieur-Holding GmbH, based in Germany. The company has been assigned to the Services segment. At the acquisition date, contingent purchase price payments amounted to CHF 1.5 million, of which CHF 0.4 million had been paid by the middle of These purchase price payments depend on business performance in the coming years. The goodwill recognised is attributable primarily to the expected synergies and the acquisition of a qualified workforce. The transaction costs amounted to CHF 0.4 million. Had the company already been acquired as at 1 January, total operating revenue for the previous year would have been CHF 8.6 million higher and net profit CHF 0.5 million higher. Between the point at which the company was fully consolidated and 30 June, the acquired company recorded a total operating revenue of CHF 1.8 million and a net profit of CHF 0.1 million. Inag-Nievergelt AG On 14 June, BKW acquired a majority stake of 80 % in Inag-Nievergelt AG (Inag). The company has been assigned to the Services segment. At the acquisition date, deferred purchase price payments amounted to CHF 2.8 million, which had been fully paid up as at the reporting date. The goodwill recognised is attributable to the expected synergies and the acquisition of a qualified workforce. There were no significant transaction costs. Had the company already been acquired at the start of the reporting year, total operating revenue for the first half of would have been CHF 16.4 million higher and net profit CHF 0.8 million higher. Between the point at which the company was fully consolidated and 30 June, the acquired company recorded a total operating revenue of CHF 4.5 million and a net profit of CHF 0.7 million. Miscellaneous In the first half of, BKW conducted a number of other corporate acquisitions, for which summarised figures are reported due to the individual size of each operation. BKW acquired 100 % of the shares in Schmid Amrhein AG, Marcel Rieben Ingenieure AG, Aichner, de Martin, Zweng AG and in the electrical installation specialist Hug AG, as well as in the Arpe Group and Aqua Innovation GmbH. In addition, a majority stake of 70 % was acquired in the Italian company Frosio S.r.l. All the businesses acquired have been assigned to the Services segment. At the acquisition date, contingent purchase price payments amounted to CHF 4.9 million in relation to the acquisition of these companies, of which CHF 1.3 million had been paid by the half year point in These purchase price payments depend on business performance in the coming years. The transactions included goodwill of CHF 28.4 million. The goodwill recognised is attributable primarily to the expected future synergies and the acquisition of a qualified workforce. The transaction costs amounted to CHF 0.5 million. Had the companies already been acquired as at 1 January, total operating revenue for the first half of would have been CHF 15.7 million higher and net profit CHF 2.2 million higher. Between the point at which the individual companies were fully consolidated and 30 June, the acquired companies recorded cumulative total operating revenue of CHF 13.1 million and a total net profit of CHF 0.5 million.

23 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 23 4 Discontinued operations BKW is intending to focus its activities in Italy on energy production and engineering, and energy contracting and services in the building technologies industry. BKW is therefore assessing various options for the Italian distribution business, with the main focus on selling the sales activities, including the corresponding sales contracts and customer base. These services are performed by the group company Electra Italia S.p.A., which is classified as a discontinued operation. The business of Electra Italia is assigned to the Energy and Grid segments. Sales negotiations are currently in progress with various potential buyers. BKW expects these negotiations to be concluded during the second half of The results of Electra Italia are composed as follows: Energy Grid Total Total operating revenue Total operating expenses Operating profit before depreciation, amortisation and impairment Depreciation, amortisation and impairment Operating profit/loss Financial result Profit before income taxes Income taxes Net profit from discontinued operations In the consolidated statement of comprehensive income, cumulative revenues and expenses from currency translations amounting to CHF 7.5 million (31 December : CHF 7.9 million) are reported in the equity. The cash flows from discontinued operations are composed as follows: 2017 Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Translation adjustments on cash and cash equivalents Net change in cash and cash equivalents from discontinued operations Assets intended for sale include in particular the sales contracts and the customer base of the company, not the net assets of the company. These are therefore not classified and are reported as assets held for sale.

24 24 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 5 Seasonality and fluctuations in business over the year According to experience, performance of sales in the Services business is subject to seasonal fluctuations. Normally, business activity is higher in the second half of the year than in the first six months. 6 Segment reporting Segments and segment results are defined on the basis of the management approach. In accordance with the strategy, BKW s reporting lines are structured around the business areas Energy, Grid and Services. BKW operates the following three reportable business segments: The Energy business segment builds, operates and maintains BKW s pool of power plants in Switzerland and abroad. It is also responsible for the sale of energy and for trading in electricity, certificates and raw materials. The Grid segment builds, operates and maintains BKW s distribution grid. It is also responsible for the transport of energy for end customers outside BKW s supply region. The Services business segment provides energy services in the fields of building technologies, infrastructure and energy efficiency. It also provides services relating to the project management and design of new plants and the expansion of existing power plants for third parties. The column Other covers activities that are centrally managed within the Group; these consist largely of Group financing, real estate, financial assets and tax. Some of the costs that arise in conjunction with the expansion of the business areas (acquisition/integration costs, technology development costs, etc.) are borne centrally. The decommissioning and disposal funds have been assigned to the Energy segment since the start of the reporting year. In addition, the participations have been held directly by the business segments since the start of the reporting year. An adjustment has been made to the previous year s figures. Segment figures are obtained in accordance with the same accounting and valuation principles that are applied to the Group-level presentation of consolidated figures. The prices for intra-group transactions (transfer prices) are based on the market price on the transaction date.

25 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 25 Information by business segment 2017 Energy External revenue ,297.7 Grid 1 Net sales ,222.0 Own work capitalised Other operating income Internal revenue Net sales Other operating income Total operating revenue ,297.7 Total operating expenses ,041.8 Operating profit before depreciation, amortisation and impairment Depreciation, amortisation and impairment Income from associates Operating profit/loss Financial result 20.7 Profit/loss before income taxes Services Other Consolidation Total Additions: Property, plant and equipment and intangible assets from business combinations State funds Associates Investments in associates at ,372.9 Total assets at , , , , , Certain grid services were previously performed in the Grid segment and charged to the Services segment with no effect on income. The Services business segment has reported the corresponding external revenue from these services. From 2017 onwards, these grid services will be performed directly in the Services segment. In the first half of 2017, internal revenue and operating expenses from the Grid segment were down by CHF 12.8 million (previous year: CHF 10.8 million; the segment figures have been adjusted accordingly). This has not had an effect on the operating profit of the two business segments.

26 26 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group (restated) Energy External revenue ,190.0 Grid Net sales ,126.9 Own work capitalised Other operating income Internal revenue Net sales Other operating income Total operating revenue ,190.0 Total operating expenses Operating profit before depreciation, amortisation and impairment Depreciation, amortisation and impairment Income from associates Operating profit/loss Financial result 18.2 Profit/loss before income taxes Services Other Consolidation Total Additions: Property, plant and equipment and intangible assets from business combinations State funds Associates Investments in associates at ,100.2 Total assets at , , , , ,226.6

27 HALF-YEAR REPORT 2017 Half-Year Financial Statements of the BKW Group 27 7 Energy procurement/transport (restated) 2017 Cost of energy procurement from third parties and associates Provision for onerous energy procurement contracts Provisions used Provisions added Provisions released Total energy procurement expenses Energy transport expenses Total Financial result (restated) 2017 Interest income Dividend income Value adjustment on state funds Gains from the disposal of financial assets Value adjustment on securities held for trading Other financial income Currency translations Financial income Interest expenses Capitalised borrowing costs Interest on provisions Losses from the disposal of financial assets Value adjustment on securities held for trading Impairment of financial assets Other financial expenses Currency translations Financial expenses Financial result Dividends In accordance with the decision made at the BKW AG Annual General Meeting held on 12 May 2017, a dividend of CHF 1.60 (previous year: CHF 1.60) per share was paid for the financial year.